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Members Question Oversight and Administration of ARPA-E

GAO Review Reveals Numerous ARPA-E Awards Overlap with Industry and Other Government Efforts

Jan 24, 2012

Washington, DC – Today the Subcommittee on Investigations and Oversight held a hearing to review the efforts of the Advanced Research Projects Agency – Energy (ARPA-E), which is a Department of Energy (DOE) agency tasked with funding cutting-edge energy research. The legislation that authorized ARPA-E specifically directs funds to be spent “in areas that industry by itself is not likely to undertake because of technical and financial uncertainty.”

Investigations and Oversight Subcommittee Chairman Paul Broun (R-GA) noted in his opening remarks that ARPA-E’s mission and goals are “generally well supported on both sides of the aisle here in Congress, and for good reason – if the federal government is going to fund energy research it should not duplicate or crowd-out private sector investment.”

However, a report released today by the Government Accountability Office (GAO) found that 12 of the 18 companies it identified as having received private sector funding prior to their ARPA-E award planned to use ARPA-E funding to either advance or accelerate prior-funded work. Further, Chairman Broun noted, “Similarly, a review of GAO work papers and publicly available information indicates numerous instances of overlap and duplication between ARPA-E and both public and private sector funding.”

In addition, DOE’s Office of the Inspector General (IG) released its own audit in August 2011 that focused on “whether ARPA-E implemented safeguards necessary to achieve its goals and objectives and to effectively deploy associated Recovery Act resources.” Two of the three awards examined in detail by the IG had questionable costs of $280,387. Included among these costs were “meetings with bankers to raise capital” and a “fee to appear on a local television show.” Despite concerns regarding these uses of taxpayer dollars, the DOE IG noted in its report that such activities were cited as an allowable cost by ARPA-E under its Technology Transfer and Outreach policy.

Mr. Frank Rusco, Director of Energy and Science Issues at GAO, testified that ARPA-E “could improve its collection of information from applicants” to better inform the award selection process. As part of his statement, Chairman Broun released a majority staff report providing further context and quantification to the areas of concern reviewed by GAO and the IG. The report found that “while it is clear many ARPA-E projects are pursuing high-quality, potentially transformative research that is too risky for private investment, reviews of GAO work papers and publicly available information reveal many exceptions to this practice, and raise questions regarding ARPA-E’s commitment to ‘carefully structure its projects to avoid any overlap with public and private sources of funding.’”

Numerous awardees indicated to GAO they would use ARPA-E funding to accelerate work they were already pursuing.

Numerous awardees’ proposals overlap and even duplicate efforts supported elsewhere in DOE and other Federal agencies.

The Administration touted ARPA-E awardees that received private sector funding after their ARPA-E award as proof that ARPA-E is working and successful; however, ten of these eleven recipients had also received significant private sector funding prior to receiving their award, raising questions regarding the degree to which the ARPA-E award itself was the driver of the follow-on funding.

Of the 44 identified small- and medium-size companies that received ARPA-E awards, a review of USASpending.gov shows that 26, or 59 percent, of these companies received other funding from the Federal government.

Over 60 percent of proposals funded by ARPA-E sought to advance technology to Technology Readiness Level (TRL) 6 and beyond—the late stage technology demonstration and system commissioning and operation that is regularly supported by the private sector.

The full Staff Report is available as an attachment to Chairman Broun’s statement HERE
The GAO report is available HERE
The IG report is available HERE